Goodbye 2020 ... Hello 2021

Schalk Louw shares his outlook for the largest asset classes available to local investors.

- Schalk Louw

2020 will undoubtedly go down in history as the year of the Covid-19 pandemic. It is therefore with great enthusiasm that I look ahead to what I hope will be a much better 2021. In this issue, I recap the performance of a few asset classes during 2020 and discuss what we might expect of them in 2021.

Local shares

What a year it’s been for shares. Following the FTSE/JSE All Share Index’s (JSE) performance for the five-year period ending 31 December 2019, during which it couldn’t even yield returns of 6% per year, all hopes were set on 2020 to be the year of recovery. But global markets saw one of the biggest crashes since 2008 when Covid-19 was declared a pandemic. By 19 March 2020, the JSE was trading 30% lower than at the beginning of 2020.

From 1987 until now, the JSE has only declined by more than 30% on five occasions. Although it was trading at higher levels on all four prior occasions, the recovery experienced during this correction has by far been the most aggressive. As at the time of writing, the JSE was trading in positive territory for the year (see graph).